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Consultant's survey ranks
Las Vegas high for low corporate operating
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Wednesday, February 06, 2002
Las Vegas Review-Journal
LV fares well in survey of corporate costs
Valley could benefit from more relocations
John Boyd thinks Las Vegas will emerge
as one of the nation's top cities for Fortune 500 companies
looking to relocate their headquarters, a trend started last
year by Boeing Corp. and fueled by recessionary times.
His Princeton, N.J., corporate location
consulting company, The Boyd Company Inc. (not affiliated with
Las Vegas-based Boyd Gaming Corp.), completed a recent study
on operating costs for headquarters occupying 100,000 square
feet of premium office space and employing a support staff of
Las Vegas came in at slightly more than $22
million a year, higher than only Indianapolis on a list of 25
major U.S. cities.
San Francisco topped the list with
operating costs at $29.1 million, followed by San Jose,
Calif., and New York.
"The critical element of economic
development is timing," said Boyd, who was in Las Vegas for a
Tuesday meeting with corporate executives interested in the
"I've seen cities come in and out of favor
over time. A lot of Sun Belt communities that offered less
operating expenses over the '90s may have become a victim of
their own success ... increased wage pressure, escalating land
Boyd suggests that Boeing's move from
Seattle to Chicago was historic and that corporations are
re-engineering themselves because of free trade pacts and the
Manufacturing plants have closed or moved
overseas, warehouse operations have been consolidated, staffs
have been downsized.
"Now they're focusing on their white-collar
facilities, including corporate headquarters," Boyd said.
"That's taking place when comparative economics are critical.
They're not improving the bottom line through added revenue,
they're not making more sales, so they have to cut costs."
Las Vegas breaks out favorably in Boyd's
chart of total annual geographically variable operating costs.
Labor costs here, for instance, totaled
$17.4 million annually, including benefits, for a
100,000-square-foot headquarters with 500 employees, compared
with $22.2 million annually in San Francisco. Office rent was
estimated at $2.4 million annually, on par with Dallas,
Phoenix, Denver and Houston, but again much cheaper than San
Francisco ($4.5 million) or New York ($3.5 million).
Electric power costs, while rising in Las
Vegas, were calculated at $112,068 annually, slightly higher
than Houston and Denver.
Boyd points to other factors such as the
absence of corporate and personal income taxes, relatively low
land prices and a legislative environment that's perceived as
being friendly to business.
He noted that Nevada's Legislature made a
key move before Enron's problems were exposed when it approved
reducing the liability of corporate officers and directors. It
also set up chancery courts to handle legal issues related to
business, similar to a system used in Delaware.
"I think his study is right on and we
should see more of this occurring," said Dan Van Epp,
president of the Howard Hughes Corp., which moved its
headquarters a couple of years ago from Hughes Center to
The Rouse Co., parent of Hughes Corp., has
also established its Western region headquarters in Las Vegas.
"A lot of us have said Las Vegas is one of
the best-kept secrets in attracting high-tech companies and
corporate headquarters. Of course, we have an attractive
corporate tax structure and a great quality of life," Van Epp
A knock on Las Vegas has always been its
lack of an educated and skilled work force, but Van Epp said
he was talking to some people in Berkeley, Calif., who
mentioned that Las Vegas is attracting a cadre of
professionals looking for a lifestyle to complement their
"It's an elastic labor market," Boyd said.
"It has in-migration, it has potential for growth. That
mitigates inflationary wage pressures."
He said the casino industry has trained a
work force here with skills that can be transferred to the
corporate office, including secretarial and administrative
personnel and customer service representatives.
Companies such as Ford Credit, Household
Finance and Williams-Sonoma have already set up operations in
Las Vegas to take advantage of a diverse and flexible work
force, Boyd said.
The city has quality commercial airline
service at McCarran International Airport, which helped Las
Vegas come in low on corporate travel costs at $420,389 in
"There's no perfect location. It's
trade-offs," Boyd said. "When you talk about qualitative
factors, some people like vanilla and some like